What The Globe Didn't Tell You About Global Partners

What The Globe Didn't Tell You About Global Partners

Global Partners has learned the public relations lessons pioneered for its corporate predecessor, Standard Oil

It's a wonderful story of a scrappy family business, started with a single oil delivery truck, growing into what is said to be one of the largest companies in the world. And the picture of its CEO with a vintage gas pump sets the stage for an American success story, family entrepreneurs riding the domestic energy boom, helping to lessen our dependence on foreign oil. But if you read today's Boston Globe story "Global Partners is now an industry powerhouse" there's much you won't learn about Global, its plans for the Boston area, and how good a corporate citizen it is.

Global Partners, as the story says, is number 157 on the Fortune 500 list of largest companies, a ranking that comes from its revenue of $17.6 billion 2012. From this, it made a profit of $45 million. This compares with number 156, Freeport-McMoRan Copper & Gold whose profit was is $3 billion, and number 158, Bristol-Myers Squibb, whose profit was $1.9 billion. As its financial numbers indicate, Global is a high revenue company with a razor thin profit margin of .3%. With margins so small, cost control and avoidance becomes core to its business model.

To bring ethanol to its blending facility in Revere, Global has methodically built a rail network, its "virtual pipeline", that leads from the cornfields of the midwest to the east coast. Lacking the appropriate rail offloading facilities in Revere, the large ethanol trains now pass through Worcester and turn south to Providence where they are offloaded on to barges which make the trip up the coast. A unified rail link, avoiding the offloading to barges, would be more efficient and less costly.

To that end, Global needs a license from the state Department of Environment Protection (DEP) that would allow it to upgrade its railway siding along a protected waterway. The State legislature, reacting to community concerns over safety, prohibited the issuance of that license until a safety study was performed by the state Department of Transportation (DOT). That study showed that communities were unprepared for the potential ethanol shipments and that cities would need to develop evacuation plans for hundreds of thousands of citizens, as well as acquire the special alcohol-resistant foam necessary to fight ethanol fires. Fortunately for Global Partner's profit margin, it has no obligation to pay for these safety measures and, due to regulatory pre-emption by the Federal government, state and local authorities have no ability to control them.

As a business that privatizes profits but lets the taxpaying public cover the inevitable costs of doing business, it might be of interest to Globe readers whether Global Partners, like citizens relying on a municipal fire department, is paying its fair share of taxes. According to its 2012 filings with the Security and Exchange Commission (PDF), Global Partners paid $1.6 million dollars of income taxes on its $17 billion in revenue. Additionally, as outlined in its filing, Global's structure as a partnership, not a corporation, means that it is not taxed at the 35% corporate tax rate, and it isn't taxed, at the entity level, by various states.

In light of the DOT safety report, the State Senate, as part of its budget resolution, included an amendment to the state Environmental Protection laws that would preclude the DEP from issuing a license to any ethanol blending facility located within a mile of a census block that has a density of greater than 4000 per square mile. This provision is currently before a joint House/Senate conference committee and is actively being lobbied by community members and, according to activists, Global Partners.

The modern practice of public relations can be traced back to the early 1900s when John D. Rockefeller, retained Ivy Lee to burnish his reputation after the Ludlow Massacre at one of Rockefeller's coal mines killed up to two dozen workers and their families. Rockefeller's Standard Oil later became Exxon, and in 2010, Global Partners bought 190 retail gas stations from ExxonMobil. A century later, those public relation skills invented on behalf of Global's corporate predecessor are on full display in Sunday's Boston Globe.

Globe reporter Erin Ailworth did not respond to an emailed request for comment on her article.

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